Twitter Inks $1B Investment Deal With Elliott Management, Silver Lake

Jack Dorsey-Getty-H 2016
Scott Olson/Getty Images

The social media giant will continue to be led by CEO Jack Dorsey as it strikes a cooperation agreement with activist investor Elliott Management.

Twitter has reached a settlement with activist investor Elliott Management that includes tech investor Silver Lake taking a $1 billion stake in the social media giant and co-founder and CEO Jack Dorsey remaining at the helm, at least for now.

Twitter also inked a cooperation agreement with Elliott Management that will see Silver Lake’s investment, together with cash on hand, fund a $2 billion share repurchase program.

And Egon Durban, co-CEO and managing partner of Silver Lake, and Jesse Cohn, a partner at Elliott, will join the Twitter boardroom. The company will also look for a third new independent director with technology experience to join the boardroom.

A truce being struck with Twitter follows Elliott Management last week taking a 4 percent stake in the social media giant and proposing four nominees to the board room as an apparent challenge to the leadership of CEO Dorsey.

Elliott expressed concern about Dorsey's dual CEO roles at Twitter and payments company Square, another company he runs.

"Twitter has undergone remarkable change over the last several years. We are deeply proud of our accomplishments and confident we are on the right path with Jack’s leadership and the executive team," Patrick Pichette, lead independent director of the Twitter board, said in a statement.

"As a board, we regularly review and evaluate how Twitter is run, and while our CEO structure is unique, so is Jack and so is this company. To continue to ensure strong governance, we are pleased to create a temporary board committee that will build on our regular evaluation of Twitter’s leadership structure," Pichette added.

Dorsey in his own statement said: “Silver Lake’s investment in Twitter is a strong vote of confidence in our work and our path forward. They are one of the most respected voices in technology and finance and we are fortunate to have them as our new partner and as a member of our board. We welcome the support of Egon and Jesse, and look forward to their positive contributions as we continue to build a service that delivers for customers, and drives value for stakeholders.”

Dorsey will remain at the Twitter helm, but will face more scrutiny after the boardroom shake-up. The company has  formed an independent five-member committee "that will build on the board’s regular evaluation of Twitter’s leadership structure," a statement said.

Pichette will chair the committee and two additional independent current board members, along with Durban and Cohn, will also participate.

"The committee will also evaluate the CEO succession plan with the CEO and make recommendations consistent with corporate governance best practices with respect to the elimination of the company’s staggered board. The committee will report on its evaluation to the board any considerations or recommended changes and will conclude its work and share the results publicly before the end of the year," Twitter said in its statement.